Opinion
No. X02-CV02-0174569 S
May 23, 2006
MEMORANDUM OF DECISION RE MOTIONS TO STRIKE
I. BACKGROUND
Plaintiff Connecticut Resources Recovery Authority (hereinafter referred to as CRRA) claims that it was injured as a result of a restructuring transaction that it entered into with The Connecticut Light and Power Company and Enron Marketing, Inc. CRRA seeks to recover approximately 200 million dollars that it claims was lost when Enron stopped making payments owed to CRRA and filed for bankruptcy. This lawsuit is brought against three law firms that provided certain legal services in connection with the restructuring transaction. The instant motions to strike involve two of the law firms, namely, Murtha Cullina, LLP (hereinafter referred to as Murtha), and Hawkins, Delafield and Wood (hereinafter referred to as Hawkins), which both represented CRRA at the time of the transaction.
At the time of their representation both Hawkins and Murtha had signed an agreement with CRRA. In the agreement both defendants were referred to as "consultant." The agreement, in relevant part, reads as follows:
12. Indemnification
(Hawkins) (Murtha) shall at all times protect, defend, indemnify and hold harmless CRRA and its board of directors, officers, agents and employees from and against any and all liabilities, actions, claims, damages, losses, judgments, workers' compensation payments, costs and expenses (including but not limited to attorneys fees) arising out of injuries to the person (including death), damage to property or other damages alleged to have been sustained by (a) CRRA or any of its directors, officers, agents and employees, or (b) (consultant) or any of its directors, officers, employees, agents or sub-consultants; or (c) any other person, to the extent any such injuries, damage or damages are caused or alleged to have been caused in whole or in part by the acts, omissions, or negligence of (consultant) or any of its directors, officers, employees, agents or sub-consultants. (Consultant) further undertakes to reimburse CRRA for damage to property of CRRA caused by (consultant) or any of its directors, officers, employees, agents or sub-consultants. The existence of insurance shall in no way limit the scope of this indemnification. (Consultant's) obligations under this Section 12 shall survive the termination or expiration of this Agreement.
On October 31, 2005 this Court granted both Murtha's and Hawkins's Motions to Strike certain counts of the Second Amended Complaint, on the grounds that said complaint alleged an indemnification claim and plaintiff had not alleged any third-party losses.
On November 18, 2005 CRRA filed its Substitute Complaint. Count six of the Substitute Complaint, as to Hawkins, is similar to the prior count that was stricken, except the plaintiff has removed all reference to indemnification, and plaintiff alleges that it is incurring costs and expenses, including but not limited to attorneys fees. Count three of the Substitute Complaint contains similar allegations as to Murtha.
On January 3, 2006 Hawkins moved to strike count six of the substitute complaint. On February 1, 2006 Murtha moved to strike the third count of the Substitute Complaint. The grounds for both motions are identical and will be discussed as one in the body of this decision. Both motions claim that the Substitute Complaint restates the same cause of action for indemnification, which has already been stricken because there is no claim for third-party losses. Defendants argue that the fact that the indemnification language has been removed does not change the nature of the cause of action. All parties have briefed the issue, and the case was argued before the court on May 19, 2006, wherein the Court reserved decision.
II. LAW CT Page 9340
A motion to strike tests whether the allegations in a complaint are legally sufficient to state a claim upon which relief may be granted. RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 384, 650 A.2d 153, 155 (1994). While a court must take the facts to be those alleged in the complaint when deciding a motion to strike, it must only admit well-pleaded facts and not legal conclusions or opinions stated therein. D'Amico v. Johnson, 53 Conn.App. 855, 859, 733 A.2d 869, 872 (Conn.App.Ct. 1999). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix Med. Sys. v. BOC Group, Inc., 224 Conn. 210, 215, 618 A.2d 25, 28 (1992).
In Amoco Oil Co. v. Liberty Auto and Electric Co. the Connecticut Supreme Court held that indemnification claims are to be brought only to recover losses for third-party, not first-party, losses. 262 Conn. 142 (2002). The Court held that "the logic and rationale underlying our indemnity case law are based on the premise that an action for indemnification is one in which one party seeks reimbursement from another party for losses incurred in connection with the first party's liability to a third party." Id. at 148. Defendants argue that the plaintiff is seeking to recover damages pursuant to a clause in the contract labeled "indemnification" when it has not alleged any third-party losses. Plaintiff argues that the Amoco case establishes the fact that our Supreme Court has instructed that we must look beyond the labels to clearly identify the proper cause of action. Plaintiff suggests that it is now suing for its first-party losses based upon clause (a) of the contract which reads "damages alleged to have been sustained by: (a) CRRA or any of its directors, officers, agents or employees . . ." Plaintiff further argues that the Supreme Court stated that Amoco should have been a breach of contract action for first-party losses, and not an indemnification claim, based upon similar language to the language contained in the CRRA contract.
The contract provision in the Amoco case was entitled "Liability and Indemnification." In the instant case the contract is merely entitled "Indemnification." The contract in Amoco further provided that the contractor shall reimburse, and indemnify and hold it harmless from any and all loss." The Supreme Court took special note of this clause by later placing emphasis on the words reimburse and indemnify. The court found that the wording of Amoco's complaint was improper in that it was incorrectly labeled as an indemnification case when it was really a breach of contract action. This ruling was essential to the Supreme Court's ruling that the breach of contract statute of limitations applied, as opposed to the accrual of an action based upon an indemnification agreement.
CRRA's argument that Amoco allows a first-party claim herein, because the language in the Amoco contract is similar to the language contained in the CRRA contract is misplaced. First, Amoco concerned a statute of limitations issue in which the court was not called upon to rule on the sufficiency of the specific language involved. Second, the modifying language in the two contracts is different. The Amoco contract involves a paragraph entitled "Liability and Indemnification" whereas the CRRA contract involves a paragraph entitled "Indemnification." The Amoco contract used the term reimburse, and indemnify (the) Company and hold it harmless. The CRRA contract does not contain the word reimburse in the initial paragraph. It reads that the consultant shall "protect, defend, indemnify and hold harmless." While the label Indemnification in paragraph 12 may not be the end of the inquiry, it is certainly instructive to the court regarding the intention of the parties. It is noteworthy that the second sentence of paragraph 12 does state that consultant shall reimburse CRRA for damage to property of CRRA caused by consultant. However, CRRA is not relying on that part of paragraph 12, nor does CRRA allege any damage to its property in its Substitute Complaint.
Defendants argue that paragraph 12 of the contract contains classic indemnification language. This court agrees. Sub-parts (a), (b) and (c) of the first sentence of paragraph 12 can be read as modified by the words protect, defend, indemnify and hold harmless. These sub-parts delineate the persons who could potentially be subject to "liabilities, actions, claims, damages, losses, judgments . . .," and who could potentially implicate CRRA's right to seek indemnification from the consultant.
It has been held that the phase "defend, indemnify and hold harmless" is not applicable to claims between contracting parties, but rather is "intended to protect one contracting party against liability from third party claims when the other contracting party is at fault." Pinkert v. Oliveri, No. 99-380-SLR, 2001 U.S.Dist. LEXIS 8133, at 20-21 (D.Del. May 24, 2001). Indeed, it does not make sense that either consultant, herein, would agree to "protect, defend, indemnify and hold harmless CRRA" from a lawsuit brought by CRRA itself against the consultant.
This court has examined the entire contract provision in paragraph 12 of the CRRA contract. The paragraph is entitled "Indemnification." The body of the paragraph contains the classic indemnification language of "protect, defend, indemnify and hold harmless." The paragraph further indicates that the "existence of insurance shall in no way limit the scope of this indemnification." It is clear to the court that this paragraph is a pure indemnification clause. The phase "sustained by CRRA" cannot be read in a vacuum. The language of the paragraph provides for indemnification. Just as the Pinkert court held that the phrase "incurred by owner" did not transform the Pinkert indemnification provision into a vehicle for the owner to assert its own first-party losses to seek attorneys fees, here the phrase "sustained by CRRA" does not support CRRA's claim for first-party losses as a matter of law. The paragraph does not support a direct breach of contract claim for first-party losses. It is an indemnification provision which would require an allegation of third-party losses. Such an allegation is not present in the complaint.
CONCLUSION
For the foregoing reasons, defendant Murtha and Hawkins's Motions to Strike are granted.